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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Redhawk Global, LLC,

Plaintiff

 v.

World Projects International, Inc., et al.,

Defendants

:

:

:

:

:

Civil Action 2:11-cv-00666

Judge Sargus

Magistrate Judge Abel

Order

This matter is before the Magistrate Judge on proposed intervenor Rodney Tow’s

August 27, 2012 motion to intervene pursuant to Rule 24 of the Federal Rules of Civil

Procedure (doc. 67).As a preliminary matter, defendants JRO Holding, Inc., John Rouse,

Captain Nicholas Jacomides and Kevin O’Shea’s September 6, 2012 motion to file a

response to the proposed intervenor’s reply brief (doc. 74) is GRANTED.

I. Background

The complaint makes the following allegations. Plaintiff Redhawk Global, LLC

(“Redhawk”) brokers and finances overland shipping services. Defendant World

Projects International, Inc. (“World Projects International”) implements customized

freight forwarding programs for various types of cargo. World Projects Services

International, Inc. (“World Projects Services”), World Warehouse and Distribution, Inc.

(“World Warehouse”), and Interactive Logistics, Inc., d/b/a NFI Interactive Logistics,

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Inc. (“NFI”), are subsidiaries of defendant JRO Holding, Inc. JRO is controlled by

defendants John Rouse, Captain Nicholas Jacomides, and Kevin O’Shea. The amended

complaint also alleges that the individual defendants control World Projects, but at the

preliminary pretrial conference defense counsel said that he has been told that World

Projects is unrelated to the other defendants. During February-March 2011, World

Projects International retained Redhawk to haul sixty loads to the Duke Energy-Zimmer

Station in Moscow, Ohio. World Projects International, which was paid by its customer,

owes Redhawk $214,750 for those shipments. On July 27, 2011 World Projects

International, Inc. and World Project Services International, Inc. each filed voluntary

petitions under chapter 7 in the United States Bankruptcy Court for the Southern

District of Texas, under Case Nos. 11-36341 and 11-36343, respectively.

II. Arguments of the Parties

A. Proposed Intervenor Rodney Tow’s Motion to Intervene

Proposed Intervenor, Rodney Tow, is the Chapter 7 trustee for World Projects

International, Inc. (“WPI”) and World Projects Services International, Inc. (“WPSI”) The

filing of the bankruptcy petitions stayed this action with respect WPI and WPSI, but it

has proceeded as to the remaining defendants. After Rouse, Jacomides, O’Shea and JRO

as controlling shareholders caused WPI and WPSI to file bankruptcy petitions, their

counsel informed Redhawk’s counsel that its claims for fraud, unjust enrichment, and

piercing the corporate veil became the property of the trustee and that Redhawk lacked

standing to prosecute such claims. 

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The trustee investigated the nature of the claims of fraud, unjust enrichment, and

piercing the corporate veil asserted in the complaint against the shareholders of WPI

and WPSI and maintains that he has standing to prosecute such claims against the

shareholders on behalf of the bankruptcy estate. The trustee also concluded that he

possesses other claims against the shareholders including claims for the avoidance of

preferences and fraudulent transfers and for substantive consolidation. The trustee

believes that he has a duty to pursue these claims for the benefit of the creditors of WPI

and WPSI.

B. Defendants’ Memorandum in Opposition

Defendants JRO Holding, Inc. (“JRO”), John Rouse, Captain Nicholas Jacomides,

and Kevin O’Shea argue that allowing the Trustee to intervene would be improper

because this Court does not have personal jurisdiction over the defendants in an action

brought by a trustee located in Texas against defendants located in Texas, Vermont and

Washington. Defendants maintain that the motion to intervene is untimely and that it

will suffer prejudice should the motion be granted. 

Defendants also note that the proposed intervenor failed to attach its proposed

second amended complaint referred to in the motion. Rule 24(c) of the Federal Rules of

Civil Procedures requires a motion to intervene be accompanied by a pleading that sets

out the claims for which intervention is sought. 

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C. Proposed Intervenor’s Reply 

The proposed intervenor argues that personal jurisdiction already exists over the

defendants in this case. The trustee maintains that it is clear that an analysis of whether

defendants have minimum contacts with the forum state is not applicable when a

plaintiff, such as a bankruptcy trustee, may utilize nationwide service of process under

federal law. According to the trustee, this Court has original, but not exclusive,

jurisdiction over all civil proceedings arising under or related to causes under Title 11.

As a result, this Court has subject matter jurisdiction. Because subject matter

jurisdiction exists in this Court, the trustee may utilize the procedures of the Federal

Rules of Bankruptcy Procedure providing for nationwide service of process. The trustee

argues that when a federal court siting with federal question jurisdiction exercises

person jurisdiction pursuant to a national service of process provisions, its jurisdiction

is nationwide and it need not rely on a forum state’s long-arm statute to establish

extraterritorial jurisdiction outside the forum state. 

D. Defendants’ Response to the Reply of the Trustee

Defendants argue that this Court lacks personal jurisdiction over them. The

proposed complaint fails to allege any jurisdictional facts demonstrating that the

defendants are subject to personal jurisdiction of this Court. Defendants maintain that

the trustee has confused the bankruptcy court rules for adversary proceedings with the

requirements for personal jurisdiction in federal district court. Despite the trustee’s

assertion that this court has jurisdiction, the Sixth Circuit has repeatedly found that

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service of process may not be equated to personal jurisdiction. Defendants contend that

Bankruptcy Rule 7004 applies only to adversary proceedings which are required to be

filed in the district where the cause under the Bankruptcy Code is pending.

Furthermore, Bankruptcy Court rules do not trump the constitutional limits of due

process on the exercise of personal jurisdiction. 

III. Discussion

Rule 24(a) of the Federal Rules of Civil Procedure provides in pertinent part:

(a) Intervention of Right. On timely motion, the court must permit anyone

to intervene who:

. . . 

(2) claims an interest relating to the property or transaction that is the

subject of the action, and is so situated that disposing of the action may as

a practical matter impair or impede the movant's ability to protect its

interest, unless existing parties adequately represent that interest.

Fed. R. Civ. P. 24(a). Rule 24(a) has been construed to require a party attempting to

intervene to establish (1) timeliness of the application to intervene; (2) the applicant’s

substantial legal interest in the case; (3) impairment of the applicant’s ability to protect

that interest in the absence of intervention; and, (4) inadequate representation of that

interest by parties already before the court. Michigan State AFL-CIO v. Miller, 103 F.3d

1240, 1245 (6th Cir. 1997). 

Defendants assert that the trustee’s motion to intervene is not timely and that

they will be prejudiced if his motion is granted. Discovery has been stayed and the

Court will not set a deadline for filing dispositive motions until a ruling on defendants’

motion for dismiss has been made. Defendants have not demonstrated that permitting

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the trustee to prosecute some of the claims originally brought by Redhawk will delay

the proceedings or prejudice them. As a result, the trustee’s motion is timely. The

trustee has adequately demonstrated that he has a substantial legal interest in this case.

Defendants have acknowledged that some of the claims originally brought be Redhawk

are now the property of the bankruptcy estate. As a result, the trustee is now the real

party in interest. The trustee has also shown that his ability to protect that interest will

be impaired if he is not permitted to intervene and that the existing parties do not

adequately represent his interests because the trustee has ownership of the claims. 

Defendants maintain that this Court does not have personal jurisdiction over

them. This issue is already before the Court in the pending motion to dismiss. I believe

adjudication of the motion to dismiss is the best vehicle for determining whether this

Court has jurisdiction over the defendants. Therefore, proposed intervenor Rodney

Tow’s August 27, 2012 motion to intervene pursuant to Rule 24 of the Federal Rules of

Civil Procedure (doc. 67) is GRANTED. Intervenor is ORDERED to file a complaint in

intervention within fourteen (14) days of the date of this Order.

Under the provisions of 28 U.S.C. §636(b)(1)(A), Rule 72(a), Fed. R. Civ. P., and

Eastern Division Order No. 91-3, pt. F, 5, either party may, within fourteen (14) days

after this Order is filed, file and serve on the opposing party a motion for

reconsideration by the District Judge. The motion must specifically designate the

Order, or part thereof, in question and the basis for any objection thereto. The District

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Judge, upon consideration of the motion, shall set aside any part of this Order found to

be clearly erroneous or contrary to law.

s/ Mark R. Abel 

United States Magistrate Judge 

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